Weekly Enforcement Action Tracker (July 08 – July 13)

Weekly Enforcement Action Tracker (July 08 – July 13)

Free Weekly Enforcement Action Tracker updates straight to your inbox Every Monday

CA-DBO

Penalties: N/A
Respondent: Val-Chris Investments, Inc.
Violation: Val-Chris Investments, Inc. has filed a Petition for Reinstatement of License (“Petition”) of its California Finance Lender license pursuant to Government Code section 11522, which was revoked by the Commissioner of Business Oversight (“Commissioner”) on July 29, 2014… Read More

NE-DBF

$2,000.00 in Fines

Penalties: $2,000.00
Respondent: Mid America Mortgage, Inc.
Violation: On December 13, 2017, Mid America submitted a new Mortgage Banker Branch Application (“Branch Application”) to the Department through the Nationwide Mortgage Licensing System & Registry (“NMLS”) for a branch located at 14301 First National Bank Parkway, Suite 100, Omaha, Nebraska. Mid America withdrew this Branch Application on March 13, 2018. The Branch Application was never granted by the Department… Read More

Penalties: N/A
Respondent: Pay-Day To-Day, L.L.C
Violation: Failed to renew its Delayed Deposit Services License by May 1, 2018, as required by Neb. Rev. Stat. § 45-910 (Cum. Supp. 2016)… Read More

TX-DOB

$59,250.00 in Fines

Screen Shot 2018-07-16 at 6.18.25 PM copy

Penalties: $59,250.00
Respondent: Jetpay Corporation and Jetpay HR & Payroll Services, Inc.
Violation: JetPay is conducting money transmission in Texas. The Department has not licensed JetPay; JetPay is not an authorized delegate of a license holder; JetPay is not excluded from licensure under Chapter 151, and JetPay has not been granted an exemption under Chapter 151. Consequently, the Commissioner finds that JetPay is in violation of Finance Code § 151.302… Read More

FINRA

$377,500.00 in Fines

Penalties: $200,000.00
Respondent: Cetera Financial Specialists LLC
Violation: Between January 2012 and December 2014, CFS failed to establish, maintain and enforce a supervisory system, including written supervisory procedures, reasonably designed to consider whether its registered representatives’ outside business activities would interfere with or compromise the registered persons’ responsibilities to the Firm or customers and evaluate the advisability of imposing specific conditions or limitations on its registered representatives’ outside business activities. By virtue of the foregoing, CFS violated NASD Rule 3010 (for the period before December 1, 2014) and FINRA Rule 3110 (for the period on and after December 1, 2014), as well as FINRA Rules 3270 and 2010… Read More

Penalties: $135,000.00
Respondent: M Holdings Securities, Inc.
Violation: From December 2013 through June 2015, M Holdings failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, reasonably designed to supervise representatives’ use of consolidated reports. Based on the foregoing, M Holdings violated NASD Rule 3010 and FINRA Rules 3110 and 2010… Read More

Penalties: $22,500.00
Respondent: W.R. Hambrecht + Co., LLC
Violation: Hambrecht failed to maintain adequate net capital while conducting a securities business and failed to maintain accurate books and records reflecting an accurate computation of net capital. As a result, Hambrecht violated Sections 15(c) and 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”), Exchange Act Rules 15c3-1 and 17a-3, and FINRA Rules 4511 and 2010… Read More

Penalties: $5,000.00
Respondent: Steven Kraut
Violation: From January 2012 through April 2016, while registered with IFG, Kraut performed various personal services to an IFG customer, LM, for compensation totaling $27,500. Kraut failed to provide written notice to IFG of this outside business activity, thereby violating FINRA Rules 3270 and 2010… Read More

Penalties: $5,000.00
Respondent: Matthew Alan Morris
Violation: Morris violated FINRA Rule 2010 by falsifying customer signatures on forms issued by annuity companies in order to complete the transactions in question, as well as FINRA Rules 4511 and 2010 by causing the Finn to create and maintain inaccurate books and records, in violation of §17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 17a-3 thereunder… Read More

Penalties: $5,000.00
Respondent: Daniel B. Irving, (“Irving”)
Violation: From January 2013 through August 2014, Irving mismarked 105 trades in five customer accounts as unsolicited when in fact, the trades were solicited. He thereby caused the Firm to maintain inaccurate books and records. By virtue of the foregoing, Irving violated FINRA Rules 4511(a) and 2010… Read More

Penalties: N/A
Respondent: Paul Edward Soll
Violation: In June 2018, during the course of an ongoing examination involving potential trading abuses in an elderly customer’s account, Soll, through counsel, informed FINRA staff that he would not appear for on-the-record testimony requested pursuant to FINRA Rule 8210. Soil thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Mitchell Toby Yanow
Violation: From at least August 2017 through May 2018 (the “Relevant Period”), while registered with the Firm, Yanow used the customer’s blank checks to convert at least $205,586 of the customer’s funds, which Yanow used to pay for his own personal expenses without the customer’s knowledge or consent. Thus, Yanow converted customer funds in violation of FINRA Rules 2150(a) and 2010… Read More

Penalties: N/A
Respondent: Paul Edward Soll
Violation: In June 2018, during the course of an ongoing examination involving potential trading abuses in an elderly customer’s account, Soll, through counsel, informed FINRA staff that he would not appear for on-the-record testimony requested pursuant to FINRA Rule 8210. Soil thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: $5,000.00
Respondent: Damani A. Barham
Violation: From October 21, 2016, through December 30, 2016 (the “Relevant Period”), while registered with the Firm, Barham made 17 electronic fund transfers totaling $6,975 from his personal bank account to his personal brokerage account knowing that he had insufficient funds to cover those transfers… Read More

CFPB

$6,000,000.00 in Fines

Illegal-Debt-Collection-Agency copy

Penalties: $6,000,000.00
Respondent: National Credit Adjusters, LLC, and Bradley Hochstein
Violation: Frequent unlawful debt collection acts and practices that harmed consumers, including by representing that consumers owed more than they were legally required to pay, or threatening consumers and their family members with lawsuits, visits from process servers, and arrest, when neither NCA nor the collection companies intended or had the legal authority to take those actions… Read More

SEC

$14,810,917.76 in Fines

Penalties: $1,588,682.00
Respondent: T.J. Jesky, Esq. and Mark F. DeStefano
Violation: Profited from illegal sales of stock of a company claiming to have a blockchain-related business… Read More

The logo of Credit Suisse in Zurich, Switzerland, on Thursday, July 07, 2017. 

Photographer:   Michele Limina/Bloomberg

Penalties: $7,927,160.76
Respondent: Credit Suisse Securities (USA) LLC; Sanford Michael Katz
Violation: Breaches of its fiduciary duty, inadequate disclosures, and deficiencies in compliance policies and procedures. Contemporaneously therewith, in a related action, the Commission instituted and settled administrative and cease-and-desist proceedings against Sanford Michael Katz (“Katz”), a registered representative and investment adviser of Credit Suisse… Read More

Penalties: N/A
Respondent: SEC Complaint – Charles Schwab & Co., Inc.
Violation: In 2012 and 2013, Schwab violated Exchange Act Section 17(a) and Rule 17a-8 by failing to file Suspicious Activity Reports (“SARs”) on suspicious transactions by independent investment advisers (“Advisers”) that Schwab terminated from its custodial platform. Schwab terminated the Advisers for engaging in activity Schwab determined violated its internal policies and presented a risk to Schwab or its customers… Read More

Penalties: N/A
Respondent: Egan-Jones Ratings Company
Violation: On January 22, 2013, the Commission revoked EJR’s registrations in the asset-backed securities and government securities classes and provided EJR the right to re-apply to the Commission for registration in such classes after 18 months from that date. EJR furnished such a re-application to the Commission on April 10, 2018… Read More

Penalties: N/A
Respondent: Malachi Financial Products, Inc.
Violation: Malachi and Bingham fraudulently overcharged the City of Rolling Fork, Mississippi by $33,000 in May 2015, in connection with providing municipal advisory services with respect to that city’s bond offering… Read More

Penalties: $2,800,000.00
Respondent: Charles Schwab & Co., Inc.
Violation: Failed to file Suspicious Activity Reports (SARs) on the suspicious transactions of independent investment advisers that it terminated from using Schwab to custody their client accounts… Read More

Penalties: TBD
Respondent: Andrew B Calhoun Jr.
Violation: In connection with the offer and sale of securities in the form of life settlements, since at least 2012, Pacific West perpetrated a scheme to defraud investors by using money received from investors from the sale of new life settlements to pay premiums on life settlements sold years earlier which had not matured and had exhausted “premium reserves” created by Pacific West… Read More

Penalties: N/A
Respondent: Porter B. Bingham
Violation: Malachi and Bingham fraudulently overcharged the City of Rolling Fork, Mississippi by $33,000 in May 2015, in connection with providing municipal advisory services with respect to that city’s bond offering… Read More

Penalties: $300,000.00
Respondent: ITT Educational Services, Inc. et al
Violation: Fraudulently concealed the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed… Read More

Penalties: TBD
Respondent: Andrew B Calhoun IV
Violation: In connection with the offer and sale of securities in the form of life settlements, since at least 2012, Pacific West and Calhoun perpetrated a scheme to defraud investors by using money received from investors from the sale of new life settlements to pay premiums on life settlements sold years earlier which had not matured and had exhausted “premium reserves” created by Pacific West and Calhoun… Read More

Penalties: $88,192.00
Respondent: Gene Shen
Violation: Shen shared material nonpublic information before the third announcement with a relative, with the intention that the relative trade and benefit from the trading. The relative purchased company shares one day before the announcement… Read More

Penalties: $35,000.00
Respondent: Leonard S. Schwartz
Violation: Between March 2015 and March 2016, Schwartz was a cause of four registered investment advisers’ violations of the testimonial rule under the Advisers Act when he collected and published on the internet on behalf of each of the advertisements containing testimonials concerning the investment advisers and the investment advice and services they rendered… Read More

Penalties: $15,000.00
Respondent: Romano Brothers & Company
Violation: Romano Brothers violated the testimonial rule by publishing two videos containing client testimonials about Romano Brothers and the advice and services it renders… Read More

Penalties: $7,500.00
Respondent: Tarek D. Bahgat, Lauramarie Colangelo, and WealthCFO LLC
Violation: Bahgat misappropriated money from seven of his investment advisory clients, in some instances through WealthCFO LLC, a company Bahgat controlled… Read More

Penalties: $10,000.00
Respondent: Brian S. Eyster
Violation: Eyster caused ON Investment Management Co. (“ONIMCO”) to violate the testimonial rule under the Advisers Act by publishing on the internet advertisements containing testimonials concerning Eyster and the investment advice and services he renders as an investment adviser representative of ONIMCO… Read More

Penalties: $15,000.00
Respondent: HBA Advisors, LLC, and Jaime Enrique Biel
Violation: HBA violated, and Biel caused HBA to violate, the testimonial rule under the Advisers Act by publishing on the internet advertisements containing testimonials concerning HBA, Biel and the investment advice and services they render… Read More

Penalties: TBD
Respondent: SEC Complaint – Tarek D. Bahgat, Lauramarie Colangelo, and WealthCFO LLC
Violation: Bahgat is an investment adviser who lived in Williamsville, New York and had offices in Amherst, New York until about September 2016. From at least December 2014 through September 2016, Bahgat misappropriated approximately $378,000 from his advisory clients… Read More

Penalties: $248,000.00
Respondent: Daniel Burgess
Violation: Burgess and Tucker Financial entered into an agreement with a shareholder of a company called Respect Your Universe, Inc. (a/k/ an RYU Apparel, Inc.) to sell 520,000 shares of her stock in that company using best efforts to obtain the highest price… Read More

Penalties: $1,100,000.00
Respondent: Advanced Drainage Systems, Inc. and Mark B. Sturgeon, CPA
Violation: In its registration statement and in quarterly and other reports filed with the Commission, ADS materially misstated its financial results for fiscal years 2013, 2014, and 2015, and its quarterly financial results for fiscal years 2014 and 2015… Read More

Penalties: $500,000.00
Respondent: EnCap Investments L.P.
Violation: Between September 2013 and May 2014, covered associates 2 of Respondent made campaign contributions to candidates for elected office in Texas, which offices had influence over selecting investment advisers for public entities in Texas… Read More

Penalties: N/A
Respondent: Matthew C. Woodard
Violation: In 2014 and 2015, including for a period where he was a registered representative at a brokerage firm, Woodard offered and sold unregistered securities in a business entity he owned and accepted loans on behalf of the business from an investor in the amount of $325,000, some of which he used for his own personal benefit… Read More

Penalties: $10,000.00
Respondent: William M. Greenfield
Violation: Greenfield caused TFS Securities, Inc. (“TFS”) to violate the testimonial rule under the Advisers Act by publishing on the internet advertisements containing testimonials concerning the investment advice and services he renders as an investment adviser representative of TFS… Read More

Penalties: $120,000.00
Respondent: Sofinnova Ventures, Inc.
Violation: In April 2014, a covered associate of Respondent made a campaign contribution to a candidate for elected office in Illinois, which office had influence over selecting investment advisers for public pension plans in that state… Read More

Penalties: TBD
Respondent: Dubovoy, et al.
Violation: Ukrainian hackers used advanced techniques to hack into newswire services and steal hundreds of corporate earnings releases before the newswires released them publicly… Read More

Penalties: $100,000.00
Respondent: Oaktree Capital Management, L.P.
Violation: Between September 2014 and April 2016, three covered associates of Respondent made campaign contributions to candidates for elected office in California and Rhode Island, which offices had influence over selecting investment advisers for public pension plans in those states… Read More

Penalties: TBD
Respondent: Ralph Willard Savoie
Violation: Between January 2013 and March 2016, Savoie knowingly devised a scheme to defraud at least seven investors out of approximately $187,000… Read More

Penalties: N/A
Respondent: SEC Complaint – Gene Shen
Violation: This case involves insider trading by Shen, a former Principal. A scientist at Pacific Biosciences of California, Inc. (“Pacific Biosci~nces” or the “Company”), a developer and manufacturer of genetic sequenein~ technology… Read More

Penalties: N/A
Respondent: Patrick J. Gray
Violation: From at least the fourth quarter of 2012 through the first quarter of 2013, Gray as the Chief Financial Officer of Axesstel, engaged in fraudulent accounting practices and improperly recognized and reported materially false revenue of $10.5 million (67% of revenue) in the fourth quarter and $3.8 million (38% of revenue) in the first quarter… Read More

Penalties: $52,000.00
Respondent: Pawel P. Dynkowski, et al.
Violation: Mangiapane, a registered representative, helped plan and execute sell orders for nominee accounts in the Asia Global scheme. The complaint further alleges that Mangiapane helped launder proceeds from a pump-and-dump scheme involving the stock of GH3 International, Inc… Read More

Penalties: N/A
Respondent: Penn West Petroleum Ltd., d/b/a Obsidian Energy Ltd., Todd H. Takayasu, Jeffery A. Curran, and Waldemar Grab
Violation: Takeyasu and Curran directed the reclass-to-capital practices without ensuring that the accounting entries reconciled with actual capital spending amounts, and Curran and Grab were repeatedly warned by a subordinate accountant that the reclass entries lacked support. In September 2014, the company publicly reported that it would restate its financial statements from 2012 to the first quarter of 2014 and its historical financial statements and related audit reports could no longer be relied upon… Read More

Penalties: TBD
Respondent: Robert O. Carr and Katherine M. Hanratty
Violation: Robert O. Carr provided his longtime girlfriend, Katherine M. Hanratty, with confidential information about a potential acquisition of Heartland Payment Systems, Inc. by another payment processing company. In the weeks leading up to the merger announcement, Carr allegedly gave Hanratty $1 million to open a brokerage account and instructed her to use almost all of the funds to purchase Heartland stock… Read More

Penalties: TBD
Respondent: SEC Complaint – Robert O. Carr and Katherine M. Hanratty
Violation: This case involves insider trading by Carr, a New Hampshire resident, and Hanratty, a Connecticut resident, in the shares of Heartland Payment Systems, Inc… Read More

Penalties: N/A
Respondent: Anton & Chia, LLP, et al.
Violation: In performing the interim reviews of CannaVEST’s financial statements, Shek engaged in improper professional conduct by failing to adhere to standards of the Public Company Accounting Oversight Board (“PCAOB”) and ignoring a number of red flags that indicated that CannaVEST’s financial information contained material misstatements. As a result, Shek engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice… Read More

Penalties: $92,383.00
Respondent: FP Resources USA Inc. and Lobster Point Holdings Limited
Violation: Respondents’ disclosure regarding their beneficial ownership was due no later than January 11, 2016, and by no later than February 22, 2016, the Respondents had taken a series of significant steps to acquire the Company that they were required to disclose, they failed to make these disclosures in a Schedule 13D until March 25, 2016… Read More

Penalties: $50,000.00
Respondent: Genesis Associates Limited Partnership
Violation: The repeated failure of Genesis Associates Limited Partnership (“Genesis” or “Respondent”) to make a statement of a position and provide required information to investors concerning three tender offers for Uniprop Manufactured Housing Communities Income Fund II (“Uniprop”), an investment fund managed by Genesis… Read More

Penalties: TBD
Respondent: John B. Engebretson
Violation: From at least January 2012 through July 2016, Strong Investment Management (“Strong”) and its co-founder, owner, president, and chief executive officer, Joseph B. Bronson, engaged in a fraudulent trade allocation scheme, or “cherry-picking,” that harmed their advisory clients. It further alleged that from at least January 2012 until September or October 2014, Engebretson aided and abetted Strong’s failure to implement policies and procedures reasonably designed to prevent cherry-picking… Read More

Penalties: TBD
Respondent: Donald V. Watkins, Sr., et al.
Violation: Watkins and his companies defrauded professional athletes and other investors out of millions of dollars by telling them that their investments would be used to support waste-to-energy ventures. The complaint alleges that, in reality, Watkins spent much of the money he raised to cover personal expenses like alimony, past due taxes and credit card bills, and to make payments to prior investors… Read More